Basking Ridge, NJ, September 10, 2024 - Barnes & Noble Education, Inc. (NYSE: BNED), a leading solutions provider for the education industry, today reported sales and earnings for the first quarter ended on July 27, 2024. The following figures are GAAP results from continuing operations on a consolidated basis, unless noted otherwise. Note that Adjusted EBITDA is a non-GAAP calculation. Full quarterly financial tables and a reconciliation of non-GAAP measures to the most applicable GAAP measures can be found in the Investor Relations section of BNED’s website at https://investors.bned.com and its Current Report on Form 8-K filed with the SEC on the date of this release.

Barnes & Noble Education is a highly seasonal business, and the first quarter is historically a period of low sales activity for the Company. First quarter fiscal year 2025 revenue decreased by $(0.7) million, or -0.3%, from last year to $263.4 million, primarily driven by a net decrease in physical locations, many of which were closures of underperforming stores, which has helped to improve profitability. Revenues from BNC First Day programs increased approximately $19.6 million, or 32%, helping to offset much of the decline.

Overall net loss was $(99.5) million, which was elevated due to one-time expenses related to the recent milestone equity and refinancing transactions1, including a non-cash charge of $(55.2) million due to the extinguishment of debt caused by the conversion of our second lien debt into equity. This event meaningfully strengthened the Company’s balance sheet. Adjusted EBITDA improved by $5.2 million from last year to $(20.7) million, in part due to lower selling and administrative expenses of $10.5 million as the result of cost-saving and productivity initiatives.

Jonathan Shar, CEO, noted, “It was a very busy quarter as we completed our milestone equity and refinancing transactions and worked hard to prepare for the upcoming Fall Rush with our store teams, vendors and other business partners. We are excited by the momentum and fresh energy as we enter the new academic year.

“The rapid growth of our BNC First Day programs is a bright spot for our business, and we anticipate continued growth as numerous institutions adopt our affordable access models for the benefit of their students’ academic success through improved affordability, access and convenience.”

Shar further added, “Our stores are well stocked for Fall Rush, and we are prepared to support students across the country in their academic journey, ensuring they have the resources they need to succeed while providing all of our customers with an unmatched product assortment and retail experience."

Barnes & Noble Education is focused on driving material improvements in its profitability and seeks to further build upon the strong financial foundation that it recently attained from the milestone transactions. Management is working on consolidating and simplifying its operations to better focus on its core physical and virtual bookstore businesses. Recently completed and in-progress initiatives comprised of over $10.0 million in go-forward savings include the following:

–Streamlining corporate employee staffing levels.

–Optimizing, consolidating and bidding out various insurance programs.

–Repricing, eliminating or consolidating multiple IT and telecom vendors and programs. These efforts included enhancing certain customer support services by utilizing insourcing.

–Changing certain professional service providers and eliminating lower-impact investor and communication resources.

In the medium term, BNED believes that there are opportunities to materially improve its working capital position by lowering certain credit reserves, improving inventory turns, and enhancing the Company’s overall capital allocation framework.

BNED is also working to launch a new stock compensation program, linking elements of compensation to stock price performance, for a broad range of employees that will promote a more ownership-minded culture and better align management and employees with stockholders.

The Company anticipates spending approximately $20.0 million on capital expenditures in fiscal year 2025, with the bulk of those investments focused on store improvements and technology.

At this time, BNED is not providing formal guidance, but management’s budget goals target a material improvement in fiscal year 2025 GAAP operating results and Adjusted EBITDA versus last year. Based on current estimates of capital expenditures and significantly reduced interest costs from last fiscal year, BNED believes it can drive meaningful operating free cash flow, which will be used to further de-lever its balance sheet.

1.On June 10, 2024, the Company closed on the milestone equity and refinancing transactions, which included the infusion of approximately $80.0 million of net new cash into the business and a new four-year, $325.0 million credit facility.

Barnes & Noble Education, Inc. (NYSE: BNED) is a leading solutions provider for the education industry, driving affordability, access and achievement at hundreds of academic institutions nationwide and ensuring millions of students are equipped for success in the classroom and beyond. Through its family of brands, BNED offers campus retail services and academic solutions, wholesale capabilities and more. BNED is a company serving all who work to elevate their lives through education, supporting students, faculty and institutions as they make tomorrow a better and smarter world. For more information, visit www.bned.com.

This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and information relating to us and our business that are based on the beliefs of our management as well as assumptions made by and information currently available to our management. When used in this communication, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “will,” “forecasts,” “projections,” and similar expressions, as they relate to us or our management, identify forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements, which include but are not limited to the anticipated savings and benefits of our expense management initiatives, anticipated growth in our BNC First Day program, future capital expenditures, expected trends in financial results, including forward-looking Adjusted EBITDA and operating free cash flow. We caution you not to place undue reliance on these forward-looking statements. Such statements reflect our current views with respect to future events, the outcome of which is subject to certain risks, including, but not limited to: the amount of our indebtedness and ability to comply with covenants contained in our credit agreement; our ability to maintain adequate liquidity levels to support ongoing inventory purchases and related vendor payments in a timely manner; slower than anticipated pace of adoption of our BNC First Day® equitable and inclusive access course material models; our dependency on strategic service provider relationships and the potential for adverse operational and financial changes to these strategic service provider relationships; non-renewal of our managed bookstore, physical and/or online store contracts; general competitive conditions; a decline in college enrollment or decreased funding available for students; technological changes, including the adoption of artificial intelligence technologies for educational content; disruptions to our information technology systems, infrastructure, data, supplier systems, and customer ordering and payment systems due to computer malware, viruses, hacking and phishing attacks; disruption of or interference with third party service providers and our own proprietary technology; impacts that public health crises may have on the overall demand for BNED products and services, our operations, the operations of our suppliers, service providers, and campus partners as well as the ability of our suppliers to manufacture or source products, particularly from outside of the United States; and changes in applicable domestic and international laws, rules or regulations or changes in enforcement practices, including, without limitation, the impact of recently proposed regulatory changes by the United States Department of Education, U.S. tax reform, or changes to consumer data privacy rights legislation, as well as related guidance. Moreover, we operate in a very competitive and rapidly changing environment and new risks may emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.

For a more detailed discussion of these factors, and other factors that could cause actual results to vary materially, interested parties should review the risk factors listed in the Company’s Annual Report on Form 10-K for the year ended April 27, 2024 as filed with the SEC. Any forward-looking statements made by us in this press release speak only as of the date of this press release, and we do not intend to update these forward-looking statements after the date of this press release, except as required by law.

 

									13 weeks ended
															July 27, 2024						July 29, 2023
Sales:
Product sales and other															$	250,926					$	252,650
Rental income															12,505						11,511
Total sales															263,431						264,161
Cost of sales (exclusive of depreciation and amortization expense):
Product and other cost of sales															209,425						207,014
Rental cost of sales															6,800						6,513
Total cost of sales															216,225						213,527
Gross profit															47,206						50,634
Selling and administrative expenses															67,023						77,476
Depreciation and amortization expense															13,057						10,253
Loss on extinguishment of debt (a)															55,233						—
Restructuring and other charges (a)															3,618						4,633
Operating loss															(91,725)						(41,728)
Interest expense, net															7,618						8,254
Loss from continuing operations before income taxes															(99,343)						(49,982)
Income tax expense (benefit)															136						(11)
Loss from continuing operations															$	(99,479)					$	(49,971)
Loss from discontinued operations, net of tax of $0 and $20, respectively															$	—					$	(417)
Net Loss															$	(99,479)					$	(50,388)
Loss per common share:
Basic and Diluted:
Continuing operations															$	(7.36)					$	(18.87)
Discontinued operations															$	—					$	(0.16)
Total Basic and Diluted Earnings per share															$	(7.36)					$	(19.03)
Weighted average common shares outstanding - Basic and Diluted															13,511						2,648

(a)     For additional information, see the Notes in the Non-GAAP disclosure information of this Press Release.

(a)     Represents the percentage these costs bear to the related sales, instead of total sales.

Non-GAAP Information (a)

Consolidated Adjusted Earnings (non-GAAP) (a) - Continuing Operations									13 weeks ended
															July 27, 2024						July 29, 2023
Net loss from continuing operations															$	(99,479)					$	(49,971)
Reconciling items (below)															57,988						5,590
Adjusted Earnings (non-GAAP)															$	(41,491)					$	(44,381)
Reconciling items
Loss on extinguishment of debt (b)															$	55,233					$	—
Restructuring and other charges (c)															3,618						4,633
Stock-based compensation expense (non-cash)															(863)						957
Reconciling items (d)															$	57,988					$	5,590
Consolidated Adjusted EBITDA (non-GAAP) (a) - Continuing Operations									13 weeks ended
															July 27, 2024						July 29, 2023
Net loss from continuing operations															$	(99,479)					$	(49,971)
Add:
Depreciation and amortization expense															13,057						10,253
Interest expense, net															7,618						8,254
Income tax expense (benefit)															136						(11)
Loss on extinguishment of debt (b)															55,233						—
Restructuring and other charges (c)															3,618						4,633
Stock-based compensation expense (non-cash)															(863)						957
Adjusted EBITDA (Non-GAAP) - Continuing Operations															$	(20,680)					$	(25,885)

(a)    For additional information, see "Use of Non-GAAP Financial Information" in the Non-GAAP disclosure information of this Press Release.

(b) We recognized a loss on extinguishment of debt of $55.2 million in the condensed consolidated statement of operations in connection with the June 10, 2024 Term Loan debt conversion, which represents the difference between the debt fair value and net carrying value, plus unamortized deferred financing costs related to the Term Loan.

(c)    Restructuring and other charges are comprised primarily of professional service costs for restructuring and process improvements, including costs related to evaluating strategic alternatives, and severance and other employee termination and benefit costs associated with the elimination of various positions as part of cost reduction objectives.

(d)    There is no pro forma income effect of the non-GAAP items.

Free Cash Flow (non-GAAP) (a)

(a)    For additional information, see "Use of Non-GAAP Financial Information" in the Non-GAAP disclosure information of this Press Release.

(b)    Purchases of property and equipment are also referred to as capital expenditures. Our investing activities consist principally of capital expenditures for contractual capital investments associated with renewing existing contracts, new store construction, digital initiatives and enhancements to internal systems and our website. The following table provides the components of total purchases of property and equipment: